Question 1

In the simple circular flow diagram, the flow of money from the firms to the markets for factors of production is called

Accepted Answer

A)  spending. 
B)  revenue. 
C)  income. 
D)  wages, rent, and profit. 
A)  spending. 
B)  revenue. 
C)  income. 
D)  wages, rent, and profit.

Question 2

John Maynard Keynes believed the ideas of economists to be

Accepted Answer

A)  generally incorrect. 
B)  powerful. 
C)  academic and without practical application. 
D)  rantings of madmen. 
A)  generally incorrect. 
B)  powerful. 
C)  academic and without practical application. 
D)  rantings of madmen.

Question 3

Figure 2-23  
-Refer to Figure 2-23. The opportunity cost of an additional doghouse increases as more doghouses are produced.

Accepted Answer

A) True 
 B)False

Question 4

Factors of production are

Accepted Answer

A)  used to produce goods and services. 
B)  also called output. 
C)  abundant in most economies. 
D)  assumed to be owned by firms in the circular-flow diagram. 
A)  used to produce goods and services. 
B)  also called output. 
C)  abundant in most economies. 
D)  assumed to be owned by firms in the circular-flow diagram.

Question 5

In the simple circular-flow diagram, who buys the factors of production?

Accepted Answer

A)  households only 
B)  firms only 
C)  both households and firms 
D)  neither households nor firms 
A)  households only 
B)  firms only 
C)  both households and firms 
D)  neither households nor firms

Question 6

Figure 2-23  
-Refer to Figure 2-23. The opportunity cost of moving from point A to point D is 10 dishwashers.

Accepted Answer

A) True 
 B)False

Question 7

Economists use one standard set of assumptions to answer all economic questions.

Accepted Answer

A) True 
 B)False

Question 8

When income increases the slope of an individual's demand curve, the demand curve

Accepted Answer

A)  turns positive. 
B)  becomes undefined. 
C)  remains negative. 
D)  becomes infinite. 
A)  turns positive. 
B)  becomes undefined. 
C)  remains negative. 
D)  becomes infinite.

Question 9

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

Accepted Answer

A)  any misunderstandings in communicating the policy to the public. 
B)  whether the policy will affect his standing among different groups in the electorate. 
C)  what amendments will be suggested by members of Congress. 
D)  All of the above are correct. 
A)  any misunderstandings in communicating the policy to the public. 
B)  whether the policy will affect his standing among different groups in the electorate. 
C)  what amendments will be suggested by members of Congress. 
D)  All of the above are correct.

Question 10

In the circular-flow diagram, firms own the factors of production and use them to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 11

Table 2-1
The following table contains some production possibilities for an economy for a given month.
  
-Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A)  400. 
B)  450. 
C)  600. 
D)  750. 
A)  400. 
B)  450. 
C)  600. 
D)  750.

Question 12

In the circular-flow diagram, which of the following items flows from firms to households through the markets for goods and services?

Accepted Answer

A)  goods and services 
B)  dollars paid to land, labor, and capital 
C)  dollars spent on goods and services 
D)  wages, rent, and profit 
A)  goods and services 
B)  dollars paid to land, labor, and capital 
C)  dollars spent on goods and services 
D)  wages, rent, and profit

Question 13

The slope of a line that passes through the points (5, 8) and (12, 12) is

Accepted Answer

A)  -4/7. 
B)  -7/4. 
C)  4/7. 
D)  7/4. 
A)  -4/7. 
B)  -7/4. 
C)  4/7. 
D)  7/4.

Question 14

The slope of an upward-sloping line is positive, and the slope of a downward-sloping line is negative.

Accepted Answer

A) True 
 B)False

Question 15

Economists try to address their subject with a scientist's objectivity.

Accepted Answer

A) True 
 B)False

Question 16

As a substitute for laboratory experiments, economists use evidence available through history's

Accepted Answer

natural ex

Question 17

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

Accepted Answer

A) True 
 B)False

Question 18

When two variables have a positive correlation,

Accepted Answer

A)  when the x-variable increases, the y-variable decreases. 
B)  when the x-variable decreases, the y-variable increases. 
C)  when the x-variable increases, the y-variable increases. 
D)  More than one of the above is correct. 
A)  when the x-variable increases, the y-variable decreases. 
B)  when the x-variable decreases, the y-variable increases. 
C)  when the x-variable increases, the y-variable increases. 
D)  More than one of the above is correct.

Question 19

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Accepted Answer

A)  performing an experiment in an economic system. 
B)  applying mathematical methods to economic analysis. 
C)  analyzing available data. 
D)  formulating theories about economic events. 
A)  performing an experiment in an economic system. 
B)  applying mathematical methods to economic analysis. 
C)  analyzing available data. 
D)  formulating theories about economic events.

Question 20

In the circular-flow diagram,

Accepted Answer

A)  firms are buyers in the markets for goods and services. 
B)  households are sellers in the markets for the factors of production. 
C)  firms are sellers in the markets for factors of production and in the markets for goods and services. 
D)  dollars that are spent on goods and services flow directly from firms to households. 
A)  firms are buyers in the markets for goods and services. 
B)  households are sellers in the markets for the factors of production. 
C)  firms are sellers in the markets for factors of production and in the markets for goods and services. 
D)  dollars that are spent on goods and services flow directly from firms to households.

Exam 2: Thinking Like an Economist

In the simple circular flow diagram, the flow of money from the firms to the markets for factors of production is called

John Maynard Keynes believed the ideas of economists to be

Figure 2-23 -Refer to Figure 2-23. The opportunity cost of an additional doghouse increases as more doghouses are produced.

Factors of production are

In the simple circular-flow diagram, who buys the factors of production?

Figure 2-23 -Refer to Figure 2-23. The opportunity cost of moving from point A to point D is 10 dishwashers.

Economists use one standard set of assumptions to answer all economic questions.

When income increases the slope of an individual's demand curve, the demand curve

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

In the circular-flow diagram, firms own the factors of production and use them to produce goods and services.

Table 2-1 The following table contains some production possibilities for an economy for a given month. -Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

In the circular-flow diagram, which of the following items flows from firms to households through the markets for goods and services?

The slope of a line that passes through the points (5, 8) and (12, 12) is

The slope of an upward-sloping line is positive, and the slope of a downward-sloping line is negative.

Economists try to address their subject with a scientist's objectivity.

As a substitute for laboratory experiments, economists use evidence available through history's

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

When two variables have a positive correlation,

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

In the circular-flow diagram,

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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